H&T GROUP PLC 
By 
The market for short-term loans, designed to be repaid when borrowers receive their wages, has grown rapidly in Britain and other countries like the U.S. as traditional bank credit lines have withered following the 2008 financial crisis.
But the industry has faced criticism from government and consumer groups over the high cost of its loans and poor treatment of its often financially-vulnerable borrowers.
Britain's consumer watchdog the Office of Fair Trading (OFT), last week called for a review after finding deep-seated problems within the 2 billion pound a year industry, which typically hands out loans up to 1000 pounds at high rates.
Speaking after an industry conference, representatives from government, the OFT and the Financial Conduct Authority (FCA), which will take over regulation of the lenders next April, said there was a broad recognition of the need for better practice.
"What the industry understood today from the summit is they now have to deal with a regulator with some real teeth. They're going to feel the hand of the regulator on their shoulder," said the finance ministry's economic secretary Sajid Javid.
Short-term lenders are coming under more scrutiny globally. The U.S. consumer watchdog said in April that new regulation could be introduced to stop the loans trapping borrowers in a cycle of debt.
In Britain, firms such as Wonga, QuickQuid and Lending Stream have flourished as the banks have pulled back. Apart from the payday firms, some customers have few alternatives other than to borrow from friends and family or from pawnbrokers such as H&T Group and Albemarle & Bond which have also thrived.
The Consumer Finance Association, which represent the major short term lenders, said the summit had been constructive, adding that additional measure on marketing could be incorporated into the industry's current code of conduct.
Martin Wheatley, chief executive of the FCA, said the conference had seen a lengthy discussion of the way payday lenders used advertising.
"An interesting question is that if payday lenders genuinely targeting particular income bracket, people with jobs, why do they advertise on daytime television?" Wheatley said.
Wheatley said a blanket ban on advertising was an option, albeit an extreme one, but said the FCA could become more prescriptive over advertising regulations if consultations, due to be launched in September, revealed a need.
A cap on annual rates, which can exceed 5,000 percent, was seen as unlikely, although the government's consumer minister Jo Swinson said the FCA could consider a limit on the overall cost of credit.
Wheatley said there was a need for a central data source to help borrowers take into account other outstanding payday loans when deciding on the cost of offering credit.
"It's one of the big gaps, or one of the very poorly defined parts of the industry today; you've got affordability assessments, but to do that you've got to have a central data source," Wheatley said. "That isn't the case today and it's something we're talking to the industry about."
Other measures which the FCA consultation could look into included introducing a time lag to slow down the transfer of cash to lenders, Swinson said.
(editing by Ron Askew)
By William James
